You’re ready to get serious about personal finance and read more than just some posts like this on the internet. How do you find the best personal finance books for you?
Amazon lists more than 10,000 books in the Budgeting and Money Management category, more than 10,000 in the Investing category, and more than 5,000 in the Retirement Planning category. There are books by celebrity authors like Dave Ramsey, historical figures like Napoleon Hill, and every sort of no name. I’m offering some of these books in the R Minus Ten bookstore.
Mechanics Manuals for Money
The majority of personal finance books break down into two types: Mechanics and Philosophy. They present two different ways to think about money. As you’ll see, you can learn to spot them by their titles.
Mechanics books tell you specific things you should do with your money, how to do them, and in what order. You need to know enough of the mechanics to work with your money. Mechanics include the six classic tasks of budgeting, compounding, allocating, diversifying, risk management, and transaction costs.
Any personal finance mechanics book worth its paper must cover these six tasks. Do you feel like you need to know more about one of these six tasks? Start with a book or section of a book that focuses there.
Good mechanics books tend to look like encyclopedias, big and thick. You probably only need one of these. You don’t need to read it cover-to-cover unless you really want to. These are more like instruction manuals–read them when you need instruction on a task.
Good mechanics books include Making the Most of Your Money Now and The 21 Day Financial Fast.
Philosophy of Money
Philosophy books tell you the properties of money and the reasons behind the mechanics. It’s the biology of money. These books tend to be shorter than the mechanics books. You can read these all the way through and reflect upon how a specific philosophy fits with your current situation, goals, risk levels, and world view.
Good philosophy books include Your Money or Your Life and Think and Grow Rich.
The Best Personal Finance Books for You
In my opinion, pick one book on money mechanics. Any book, really. Most mechanics books will lay out a plan of mechanical steps they think you should take. Those steps probably include budgeting, paying down debt, building up savings, investing, and protecting your assets.
In my opinion, starting a plan is more important than which plan you start. Why?
- Having a plan is better than no plan.
- Sticking with a plan is the hard part and the real magic.
- Over time you’re going to adapt any plan you find to meet your unique situation.
- You will see pretty quickly whether a plan is working for you if you’re measuring your results.
In the long run, I think that philosophy books serve you better. The financial markets and professionals will always offer you financial porn, which is often mechanics focused. And they’ll do it faster than the mechanics books can keep up. Having a philosophical base from which to judge these offers will serve you best. It’s the start of financial wisdom.
So, start reading!